Gulfsands has participated at a 25% working interest in another exploration discovery within Eugene Island 58 (EI58). Following the exploration success at EI58 announced in December, this new EI58 exploration well has been drilled to a total measured depth of 13,914 feet (13,380 feet true vertical depth). Electric logs acquired during drilling operations indicate the presence of hydrocarbons within multiple zones, with approximately 188 feet of potential net pay. Production casing has been set and completion operations have commenced. A test of the lowermost productive interval in the well produced natural gas at a rate of 4.5 million cubic feet per day and 24 barrels of condensate per day. First production from this well is scheduled to commence in April 2006. The net cost to Gulfsands for the drilling, completion and facility costs to hook up this well is estimated to be approximately $2.4 million.
Gulfsands will also participate with a 25% working interest in two further exploration wells in the immediate area during 2006.
Since Gulfsands listed on AIM in April 2005, the Company has participated in the drilling of seven offshore Gulf of Mexico exploration wells and five of those seven have been discoveries.
Gulf of Mexico Production Update
Gulfsands' oil and gas production continues increasing toward the levels achieved prior to Hurricane Rita. Production has increased to nearly 70% of the pre-storm levels, or at approximately 2,167 barrels of oil equivalent per day net to Gulfsands, compared to 40% in mid December 2005. Continued increases in daily production volumes are expected over the next several weeks.
John Dorrier, CEO of Gulfsands Petroleum, said:
"This new well, with Gulfsands' higher working interest, should make a notable contribution to the Gulf of Mexico reserves base as well as an important addition to 2006 production levels and net cash flow. The timing of the well coming on stream should be consistent with improving pipeline transportation conditions following repairs required due to the hurricane damage of late 2005."
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